EU extends Dexia guarantee clearance to January 2013

The European Commission extended Wednesday by four months its clearance for France, Belgium and Luxembourg to provide state guarantees worth 55 billion euros for failed Dexia bank, a statement said.

26.09.2012

(AFP) The European Commission extended Wednesday by four months its clearance for Luxembourg, France and Belgium to provide state guarantees worth 55 billion euros for failed Dexia bank, a statement said.

A previous extension expires on September 30 and Dexia, being restructured by the three governments after it collapsed twice, had asked for another four months to end-January 2013 to put the plans in place.

EU Competition Commissioner Joaquin Almunia stated on Monday that he wanted France and Belgium to "speed up" negotiations over the public guarantees needed to re-finance the group pending its final restructuring.

First bailed out in 2008 at the height of the global financial crisis, Dexia could not cope with the turmoil of the eurozone debt quagmire and in October last year Belgium, France and Luxembourg stepped in to wind up the bank.

Once approval is given for a restructuring plan, the bank will benefit from a definitive EU green light for a total of 90 billion euros in guarantees from the three governments.

Almunia said how this worked in practice needed to be firmed up now.

"We have been talking about this for too long," he said, noting that the main question which the Commission could not resolve was "the relative weight of state guarantees put up by Belgium, France and Luxembourg."

Belgium, which has put up 60.5 percent of the guarantees against 36.5 percent from France and 3.0 percent from Luxembourg, wants Paris to assume greater responsibility.